What Are Startup Cost Deductions?

When you start a business, the IRS allows you to deduct up to $5,000 in startup costs in your first year of operation, with the remaining costs amortized over 15 years. Startup costs include market research, advertising to launch, employee training, and professional fees. If total startup costs exceed $50,000, the first-year deduction begins to phase out. Organizational costs (like legal fees to form an LLC) get similar treatment. Keep all receipts and a clear record of what you spent before and during your launch.